HMRC state:-
"You may exchange shares in your personal trading company for shares in
another company. If you do this, and would have qualified for
Entrepreneurs’ Relief at the time of the exchange, you may elect that the
rules about exchanges, outlined above, are not to apply. You will then be
treated as disposing of the shares in your personal company at the time of
the exchange and Entrepreneurs’ Relief may then be claimed against anygain arising on that disposal.
You must make this election in writing to us by the first anniversary
of the 31 January following the end of the tax year in which the
qualifying disposal takes place. So for the tax year 2010-11 (ending on
5 April 2011) an election must be made by 31 January 2013."
Say my client sells his shares in consideration for shares in the buying company on 6 April 2010. He then makes the above election on 31 January 2013. Will interest be charged for the period from 1 February 2012 to date of payment on the payment that should have been paid on 31 January 2012? will surcharges be issued on this amount? Also how do I make the election? Is it just a case of amending the 2010/11 tax return to show the gain?
Many thanks
Replies (1)
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Elect by letter
You must elect by letter - the time limits are quoted above.
Once you have made the election the gain is taxable/reportable as any other gain would be so yes - the gain is reported as usual and if tax is paid late interest/surcharges are payable as usual.
Marion